tonight in the skud low report, google's nexus one super smart phone to compete with apple and shows innovation is alive and well in america. and that's pro-growth. the mini boom continues with strong factory orderses and improving car sales. but pending home sales were soft and we're going to debate the disastrous $75 billion home loan modification plan. where did all that money go? plus, free market populism is on the rise. the new-new deal is dead. remember ronald reagan said we the people, president obama said we the government planners. robert reich will debate the weekly standards. matt con nettie. but the government health care takeover will hose rich people. it might also sink the demes in

thehmidterm election. and a top senate democrat is retiring. you uh-huh. we'll have the details. and finally the kudlow hotline, i'll take your calls on everything. fasten your seatbelts, the kudlow report begins right now. good evening, i'm larry kudlow. welcome back to the kudlow report where we believe free market capitalism is still the best path to prosperity. tonight, people's money -- sorry. people's money politics message. the lead economic story is google's nexus one super smart phone. it has the right combination of heart wear and software, it uses the an detroit mobile operating system and it will compete with the i phone aiphone and blackbe. it shows that innovation and competition is alive and well.

that is so important, it's good for consumer, it's good for b business, profits and growth. the american economy is far, far from dead. and speaking of which, factory orders came in devitwice as str as expected and is huge for my minute any boom scenario. and car sales registered an 11.3 million unit gain. and the unt.a.r.p.ed ford motor company led the way. bravo. stocks were mixed, but on balance a bit higher. we did hold yesterday's huge gain and my old friend john taylor of stanford university, the creator of the monetary policy, fought back today against ben bernanke's attempted whitewash of any fed culpability in the housing and commodity bubble. taylor said the evidence is overwhelming that ultra low interest rates were a factor in the boom and ultimately the bust. i'll interview john taylor tomorrow evening to elaborate on

all these key points. last night i talked about the rise of tea party free market populism that opposes big government tax and spend and regulate and bailout in obama care. that's right. free market populism. now, many on wall street had fears of left wing populism. that would raise taxes and overregulate business. but i think those fears are way overblown. the new-new deal may have lasted exactly nine months. my favorite conservative populism was ronald reagan. he always said we the people. a key reason why the democrats are going down is nth midterm election is president obama seems to be saying we the big government central planners.ç and there is a revolt against bailout nation and high tax and spend. now, here's some political handwriting on the wall. long time democratic senator byron dorgan, there's term, he is retiring at the end of the year. uh-huh. last evening, i interviewed

scott brown. he's running for ted kennedy's senate seat in the massachusetts special election january 19th. mr. browne is running as a jfk tax cutter who opposes obama care. now, it is a pity that even the kennedy clan opposes jfk's supply side tax cuts. in today's rasmussen poll, brown turns out is only trailing his opponent martha coakley by nine points in the ultra blue massachusetts. and among independents, brown leads coakley 65% to 21%. this could be the up1e69 new decade. this could be the greatest victory since the spartans defeat defeated per sha. more happened writing on the wall in massachusetts. it makes me optimistic about the future. there's important change coming

up. so will tea party populism bring free market principles back to washington come november? joining us now to discuss this, we have cnbc contributor, form labor secretary, robert reich, the author of "supercapitalism." we also have matthew continetti and author of the persecution of sarah palin. now, let me start with matt don continetti. you're up against the best in the business, former secretary robert reich. now, i want to ask you about tea party based free market populism. is it overtaking this left liberal big government, obama care tax and spend populism that has so many up here on wall street worried? >> not in washington, larry. and that's for now the tax and spend populists are still in control. but when you look at the country at large and where the public is moving, those independent voters who will be so critical in this

year's midterm elections, they're running away from washington and toward the tea partiers. >> so secretary reich, good to see you. happy new year. >> happy new year to you. i hope 2010 is even better than 2009 for you. >> well, i hope so, too. and for you. and for all our viewers. and for matt. but look, this is an important thing. we have seen the rise of the dae party movement which may be transforming2the republican party. this is a conservative populism. it is essentially a free market populism that rejects the big government central planning, obama care, tax and spend policies. and as matt continetti said, the opinion polls show that president obama and the pelo pelosi-reid congress are losing ground in poll of a tr poll. scott brown might even win in massachusetts. that would be an unbelievable comeback. what's your take here? >> my take is that the economy really is the most important

indicator in voters minds and if you are right in terms of factory orders and purchasing orders being up and the stock market being up and everything being rosw rosy, if you're corr that means that obama's policies have done some good. in fact, they may be exactly what the country needs and voters are going to be responding accordingly. >> so, matt, there you have it. will a better economy -- and i am an economic optimist because i think free market capitalism is still more resilient, but i also think part of the stock market rise mirrors the decline in obama's polls and the democratic congressional polls. but i do want to ask you, be robert reich asked the right question as he always does. will a better economy keep the left wing populism going or is the free market conservative populism you described in your writings for the weekly standard and your book on sarah palin, is

that a deeper trend that goes mere beyond economic improvement? >> i say this. the economy is going to recover despite barack obama's tax and spend policies. when you look at the actual individual policy, whether it's the stim ligs or the t.a.r.p. or health care reform, car check, the bailout of gm and chrysler, what have you, they're all unpopular. so while the democrats in november may say we have this mini boom, i think the american people are sensible enough to understand the economy is recovering despite what's happening in washington, not necessarily because of it. >> let me agree with you in one respect and most americans don't like the government bailout of wall street, don't like the support going to big business, and most americans are really quite concerned about keeping their homes, their mortgages, and their jobs. we'll know more when the unemployment report comes out on friday. but for now, there is a big

divide in america and divide is between the people at the top who areç doing better than eve partly because the government is supporting them, bailout for the rich, but most americans are not doing that much better. that seems to me to be the ultimate divide and instead of republicans doing what i would assume any republican party who really had their eyes on 2010 would do, and that is attack big business, attack wall street. be on the side of the average working people. republicans are sort of reverting to normal republican patterns a and that is apologizes for big business, being on the side of big business, coming out even in the health care debate, one of the big issues right now is where is the money going to do cost from, is it going come out of paychecks and the wealth of people at the top as in the house version, or is it going come out of some so-called cadillac plans as in the senate version. most republicans to the extent that they're involved at all are saying, no, we don't want

anything to come oufts paychecks of the people it at the top about. >> matt, your writing suggests that there is a different kind of divide. in particular, you're saying that this tea party populist revolt, market oriented revolt, small d democratic revolt, really says we don't like crony capitalism, we don't like the way the obama white house has snuggled up to big business handing out favor, let's say for cap and trade, or even in the health care, the obama care takeover, and that the democrats are falling prey to that they can't get a class warfare message out there, they're in bed with big business doling out favors and that that's part of the revolution. do i have that right? >> you do. and i think robert is absolutely right when says that there is a divide in the country between mainstream americans and then people on wall street or other bailed out enterprises that are reaping these gains and continue to do so. but of course it's the obama administration inheriting in some cases bush economic policies that are contributing to these going to socialized

enterprises. >> matt, i can -- here's -- can i just ask in maybe both of you can answer that because i don't understand it. why aren't republicans, why doesn't the republican party say we don't like and don't sign with wall street, we don't like what big business is doing, we repudiate the policies of the bush administration with regard to all of the big subsidies and tax breaks for people who are rich and the companies at the top and we really are on the side of average working people. >> aren't they saying that -- >> why doesn't the republican party do that? >> is the gop huq'ing to the tea party movement which opposes this capitalism? are they listening to the tea party movement on obama care and on taxes and on the massive fiscal stimulus package all of which is extremely unpopular, particularly obama care which may get jammed through, but it may be a terrible blow for the democrats? in other words, is the gop more

offing into something that's closer to the tea party free market populism? >> in my view the gop isn't listening closely enough. look at florida where you have the key race versus the conservative establish -- republican establishment in governor charlie crist running for senate versus the tea party golden boy. and the republican establishment in washington is continuing to back crist. they're moving away slowly because they see the enthusiasm that the tea party movement is bringing to republican politics. again, a return to the roots. and i would say that the tea partiers would agree with rob wert th earth that it's not just obama. some of those bush economic policy, growing government by one third in bush's first term, other, corporate welfare, those sorts of things, farm subsidy, they'll say, no, we have to turn back from those policies, as well and return to the reagan roots. >> what about scott brown? you see this rasmussen poll.

likely voters. he's only nine points down. that is incredible. about he has a three or four to one lead among independents. now, matt, i ask you, this is the first of the midterm elections. it's a special election. it's in about two weeks. >> even a very close coakley win, if the democrat pulls it out is still in some way as victory for the gop because scott brown has no institutional support. it's just again these independents who are very upset with conditions in washington. i would say this, if brown does win, which is far off chance, i think, at this point, if does he win, though, he would effectively doom obama care because that would remove the democratic vote. how ironic would that be. >> let me just say something about massachusetts because i ran for governor in the last century in massachusetts. massachusetts also produced a mitt romney, it has produced a long line of republicans. it's not nearly as liberal as you might think. >> they haven't elected a

senator in 40 years since the battle of themolop yflt. this is big news. >> the other point i want to make is the populism, you are right both of you, but items not left wing versus right wing. it is populism basically says we don't trust big government and we don't trust big business, we don't trust wall street, and we especially don't trust the -- >> that's the tea party message. the democratic message is we love big government taxing and spending. as i said in the intro, ronald reagan used to say we the people. president obama, harry reid and nancy pelosi seem to be saying we the big government central planners. there's a big difference. >> the democrats were making head way on health care as long as they said to the american people and actually acted on it we are against the big private insurers who you have been battling for year, we're against the big pharmaceutical companies. as long as that was the democratic message and people understood it and democrats held

fast to that democrats were gaining. it was when the democrats basically compromised with big pharmaceuticals and also the big health care institutions and there was the collision. >> that's what's going on. matt continetti, i'll give you the last word. how is this going to impact the midterm elections? >> well, i think big fwans for republicans in both the house and the senate. robert's exactly right. my left winger friends are in-enthused now that the obama administration has rejected left wing populism and that means they're not going to turn out in november. >> all right, robert reich, thank you very much. >> we'll see. the populists will win, but it's not going top republicans. >> i feel better already. i feel better already. all right, coming up on the kudlow report, the latest on health care. are the wealthy about to be hit with more taxes? cnbc's jop harwood has the details when we return. later on, i'll take all your calls. maybe you can call me about this new tea party free market conservative populist message. anyway, i will take your calls

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so is congress going to pay for health care by levying even higher taxes on the wealthy? and brian lamb, the head of c-span, wants these negotiations to be put on c-span television as president obama promised once upon a time but it isn't look like it will happen. john harwood has the full report on all this breaking news. hello, john. happy new year. >> happy new year to you. and there's no question that people with money will pay more for health care. the only question is what kind of taxes will be levied because between the house and the senate, the question of who pays is central to those negotiations. think about what the house has done. they raisedç more than $400 billion over ten years with a 5.4% excise surtax on incomes above $500,000 for individual, $1 million for couples. the senate take as much different approach. they levy a 40% excise tax on

so-called cadillac health care plans, plans that are worth more than $23,000 for families. they also would levy a tax increase, that is, of 0.9% for those over $250,000 and those who spend a lot of tan salon, 10% tax on tanning service indoors. it looks a if the house speaker and senate leadership will negotiate over the next month and pelosi is not ready to concede. >> when it comes to tax policy around here, it's like a mirror, mirror, mirror, on the wall, who is the fairest of them all. the senate thinks theirs is fair, we think ours is. we'll see which mirror cracks. but we will proceed in a way that is fair to the american people. >> but of course the senate has more leverage in this debate because they need all the 60

votes that they got just before christmas eve to pass that bill. and as for the openness of negotiations, i wouldn't kaunt on it. any negotiation that gets moved out to in the open would tee you that the most important decisions will still be made behind closed doors because that's how politics work. >> we have to reform politics. hang on. stay with me. i want to play some sound from president obama during the campaign about these health care hearings on c-span. here's what the president said. >> that's what i will do in bringing all parties together, not negotiating behind closed door, but bringing all parties together, and broadcasting those negotiations on c-span so that the american people can see what the choices are. >> all right. so that's cool now. brian lamb, i know him very well, i'm sure you do, too, he issued a challenge today. he said he wants congress to open up the last leg of health care negotiations to the public. he says he wants c-span to have

televised coverage on the whole network. you've got your headlines here. democratic leaders plan secret health care reform deliberations. this secrecy, plus the buyouts of senator ben nelson and mary landrieu on head kmedicaid, thi could turn the public even more against obama care than it already is. >> well, i don't know about that. i think the sound that you just played from president obamaç highlighted what i consider the emptist part of his campaign rhetoric, the process changes, the reform washington changes. that is very, very difficult to do, more difficult to do than to enact policies when you've got strong majorities in the congress. it is in the nature of politics, larry, and you know because you served at a high level in the reagan administration, that the most important decisions get made in confidential consultations between the key players involved, whether in the white house staff or whether in the congress. and that's just the way it is. i used to cover the florida legislature in tallahassee, they

had a sunshine law in florida that guaranteed that meetings had to be held out in the open and what this did was just move the most important meetings behind closed doors which is how decisions ultimately get made. that is the way politics works. >> but when i was president reagan's budget deputy, i used to share all our internal conversations with the "wall street journal." i used to write for the journal. >> and i appreciate that. that was nice of you. >> i understand sometimes i used to share them with the "times" and the "washington post." just to get this stuff out. i think this secrecy thing, i know it isn't substance -- >> but it didn't happen with cameras in your office. it happened when you drped a time to the wall street journal, which we are grateful for. >> only for a good lunch. i couldn't be bought, but occasionally rented. i thinks public will get up in arms about this. and i think this poses another obstacle. anyway, thank you for your great report. coming up, with midterm elections on the horizon, this

could be a barn burner of a recovery. that's right. according to news week columnist dan gross. steve moore didn't agree. the kudlow mini boom will be debated along with the obama economic agenda for the new year. you're watching the kudlow report. i like c-span. i think brian lamb is completely right. put the negotiations right up there on c-span. (announcer) at the end of a year, about 95% of smokers

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economists don't know jack.

this is going to be a barn burner of a recovery. that's what dan gross says. love it. the "wall street journal" steve moore says no way, jose. so let's talk about this. dan gross, i love your column, i love the cluster stock.com headline, which is where i first saw it. and, dan, of course, one reason i loved it is i totally agree with you. what are your key bullets? because steve moore is a pessimist. >> ei think basically since march, the losing trade has been pessimism and the waynes trade has been optimism. whether it comes to the market which is have rallied 60%, gdp growth, all the economists said we weren't going to have gdp growth. the economy is growing at ç4.8 this quarter. whether it's job growth, look at car sales. december, people said after cash for clunkers there would nobody sales. this was a barn burner of a

month. >> factory order, profits. yield curve. >> it's not a matter of ideology, it's looking at the data. and i think just as in the fall of '07, in behind side, the great sin that everybody committed was excessive optimism. we never thought housing prices would fall or asset prices would fall. the sin in retrospect in the spring and summer of '09 was excessive pessimism because people missed the turn and they're now chasing the recovery. even now you look at vary various surveys, they're expecting very lame growth next year. i would not be surprised if it's to the upside. >> you and i will be right. steve, what dan is saying is this is america. this is america. and optimists steve always win. why are you on the pessimistic side? >> first of all, happy new year. and i actually agree with dan that economists don't know jack. that is absolutely true.

we are very fraudulent profession. and none of the economists who are supposed to be the great brain yaks predicted the great melt down that we saw in 2008. even the great larry kudlow didn't predict that, although did you predict the bull market in 2008 before others did. >> i was looking at that oil shock and the collapsing dollar. but i agree, i did not see the financial meltdown. >> on had poithis point about wd of growth we'll have, there's know question we'll have an expansion, but i think it's going to be somewhat more subdued than you and dan think it will be and i still think that we have sewn the seeds for another financial crisis. with all of this debt, with all of these new coming tax increases, and when the fed has to pull back on the money supply. so i don't think it's going to be a sustained recovery like we normally have. >> dan, how do you react to that? higher taxes are, sooner rather

than later. john harwood reported that the obama care bill has a lot of tax hikes. and the issue of the fed's exit strategy, which may or may not happen in my lifetime, but how do you react to steve moore's worries? >> taxes are almost a nonfactor. when i first started reporting in the fall of 1992, i worked at bloomberg and i interviewed all these economists achd people like steve moore said clinton will raise taxes and it will he economy and destroy the stock market.y and destroy well, we had a tremendous bull market in the 90s kate. the same people said we'll cut taxes on dividends and capital gains and we'll have stock market perform afternoons like you've never seen. unfortunately it was like we've never seen, we had eight years of essentially zero returns. so the notion is that there is a by naer connection between tweaking tax rates and what the stock market and the economy does, i think the last 16 years have proved that's not true.

>> wait a minute -- >> the fed -- the issue of removing liquidity is i think a more serious issue and they have successfully removed the money market guarantee, the commercial paper garp tee. they pulled back from a lot of that stuff. banks are paying back the t.a.r.p. the reality is we're going to have to have this recovery without huge amounts of cheap and plentiful credit. >> we'd have a steady dollar if they do it right. although i'm not at all confident about mr. bernanke. i don't think he knows how to tighten. but, steve moore, dan gross is issuing a challenge to supply side tax. and i want to raise this point.bush tax cuts will expire. there may be a big political revolution in november. that's a very strong possibility. we talked about that in the last segment. the rise of free market populism in the tea party movement. but as john harwood reported, you're either going to get a

5.4% surcharge on top of the marginal rate hike or a 1% payroll tax hike on the upper end people. now, how do you think those are l. play out? it seems to me 1% a better than 5.4%. >> please, please read the book the end of prosperity. the whole point of the book is the fundamental lesson of the last 30 years is how vitally important tax rates are to stock market returns and to the economic recovery. >> why do we have no returns on stocks in the last eight years? >> actually, if you look at what happened when the capital gains and dividend taxes came down in 2003, we had a bull market expansion just like we did -- the big bull market expansion that lasted 25 years began in 2001 when tax rates came down. but here's the thing. you may not agree with that, but something that is almost in-disputable, if you raise the capital gains and dividend taxes, the value of stocks after tax has to fall. >> that's the one that bothers me the most. >> there will an stock market correction if we raise those

taxes. >> i think the capital gains taxes utterly vital. you can't function without capital. and if you tax something, you get less of it. and that's the deal with capital. now, the clinton year, he lowered capital gains tax rate. he didn't raiseç it. >> not until much later. >> well, the market stalled in '93 and '94. yes, it took off in '95. the bush boom was snuffed out by the fedded because you had a five year run after he cut the capital gains tax. don't these tax rates on investment and investors trouble you? >> no. if you ask most investment professionals, and i've talked to business group, i put up two stock charts, which one would you rather have? even considering the higher taxes. you'd rather have the '93 to '01 chart. >> that's a little unfair. i'd like to have the '03-07

because that was preceding this credit -- the credit crunch was not a fiscal event, it was a credit event. and i think steve moore's point is almost undebatable. as soon as that lower capital gains tax rate kicked in, stocks took off if five years. >> what happens is the market kac capitalizes. look what happened in may of 2003. immediately when then the taxes came down, there was a 10% to 12% increase in spotocks. >> there were other things going on. i just think there were other facto factors. >> nobody is arguing that. >> -- it's more important than tax rates. >> no question. but what is in-disputable is that one important factor, and there are many other factor, is taxes. and there's no model that i know of that says raising taxes on capital is going to lead to higher stock --

>> on the way out of this segment, dan gross has a strong recovery in 2010. steve, you see but much less of a recovery. let me go beyond. because socks will discount by six to nine months. do you see a double dip in 2011? >> in the economy? >> i don't know. it's difficult enough to broadcast what's going to happen in the next -- >> but you're doing brilliantly for 2010. steve, do you see a double dip? 2011? >> yeah, we're in a 1970s style economy. >> larry, do you see a double dip? no, i do not. and i think a lot of these future tax heeks will be untangled as we have a total revolution in the midterm elections. dan gross, great article. i want you to e-mail it forth with to steve moore. steve, great to see you. i'll see you had this weekend. coming up, president obama's loan modificatiolç program is eating up $75 billion in

taxpayer money while the housing novembers for november were a little lower than we expected. the question is where did this $75 billion go? loan modifications has been a total disaster. christian well erranerer and da mitchell will try to help us understand. $75 billion. for what? and be sure to watch tomorrow night. we'll be joined by my pal, john d taylor of stanford university. and he'll fight back against ben bernanke's attempted white house of any fed culpability. good for january taylor. he's got a strong backbone. that's tomorrow night at 7:00 p.m. we'll interview mr. taylor. tonight we have lots more to do on the kudlow report. $75 billion down the drain. for what?

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i'll tell you what, the free market tea party conservative populists will be furious at this one. $75 billion. $75 billion. that's how much the obama administration has pumped into its failed mortgage modification

program. i want to ask where did the money go? joining us to debate is associate professor of public policy, christian weller. we also have senior fellow at the cato institute. dan mitchell. happy new year to both of you. before we begin, take a listen. a couple of interesting quotes. the former director of the federal housing finance agency, james lockhart, what he had to say about forgiving principal on these mortgage loans. >> we immediate to start forgiving principal. i know it's very tough, but there's 25% of the people are now under water in their mortgages and if we want to keep them in their house, we have to do more than lower payments. >> nobody wants to forgive principal. now, that's a plan even barney frank isn't so sure about. here's what mr. frank said earlier today on cnbc. >> we would get more

modifications of the principal. i think that's in the interests of everybody. but to mandate that across the board, i don't know what criteria you would put in. what level of distress qualifies you, how do we prevent you from sort of getting yourself into distress? if it's çvoluntary, you can control that better. so, no, i do not favor that. >> see, i got to give that round to barney frank. the big issue here is that something like 30,000 people got modified. $75 billion for 30,000 loan modifications? to me this is one of the greatest outrage even in an outrage just stimulus package. what's your take? >> it's business as usual with the government. whether it's $600 toilets or $75 billion for a handful of mortgages, government overpays for everything. government is like a bowl in a china shop. and congratulations to barney frank. he's not totally detached from

reality. he understands that if you start violating contracts and stealing money from investor, you'll really mess up the housing market in the long run and i hope that the lesson we learned from this is that bush's intervention was a bad idea and obama's intervention is a bad idea and maybe we'll finally let free markets work to fix the mess that government created. >> christian, you heard dan mitchell and i want to ask you, i know you're an influential policy guy in washington, the obama administration, what in the world did we get for $75 billion? it seems like nothing. i want my money back. >> the $75 billion is the money that's set aside. we have about $750,000 temporary modifications and 31,000 permanent ones. but clearly more needs to be done. i think the current model shows that it's not working the right way because right now the model is to provide in-accept differences.

in the end what we're learning shear that this is an uneven playing field, the big heavy guns, the bac banks and the desperate homeowners. and we need awry thi rethinking wielding a strong stick towards the services to force them to write down principal. you can do this through bankruptcy code regulation ors reform, you can do it through the tax code. there's a number of ways you can do this. >> but none of this is happening. and i want to go back to this. >> but that's exactly the point -- >> what is the ratio -- >> relying on the banks to voluntarily doing this is not the right way. >> but $75 million for 30,000 loan mods. what's the ratio? this is the worst spent money since france sold the louisiana purchase to thomas jefferson. >> you'reç playing fast and loe in the numbers. >> i'm just looking at the numbers. i'm an ordinary humble taxpayer.

>> yes, we could do more, but it is going in the right direction. but relying on voluntary modifications alone is not the only way. you do need to ultimately force the happened of the services in particular. and that means leveling the playing field through the bankruptcy code or through changes in the tax code. >> i hear christian's theory, but i don't see any reality whatsoever. >> here's the important word. christian kept talking about force. he's talking about the coercive power of government to violate contracts, turn america into a banana republic and make it so that we have much less lending in the future because eninvestors know that government can come in and pull the regular out from you said them. government got us into the mess. government won't get us out of it. >> government didn't get us into the mess. why fan w why. >> fannie and freddie and the fed? >> before the boom crisis, they had less than 10% of the new

mortgages. it was private sector problem. but the main thing here, for instance, one of the things you could do is take away some of the tax incentives for services. >> gentlemen -- >> how is it not mentioned in the constitution get the government out of the business? >> why not will heth let prices worg. people have to foreclose, they'll become renters. meanwhile the prices are adjusting. the government tried to stop the prices from adjusting. i think that was their first mistake. but mostly, dan mitchell, i want you to search for my $75 billion. you have the capitol building right behind you. i want the $75 billion back. >> you'll get them back. >> and we'll low you are your tax rates so you don't have to get too cold up there. i got to get out of here. christian weller, dan mitchell, happy new year. thanks for coming back on the show. up next i'll take your calls.

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the kudlow hotline is now open for business. we'll take all your phone calls on any subject. let us go tow3 patrick in lobo. . >> caller: my wife and i enjoy your program. is there one key indicator that will let us know that this boom will actually take place? >> a great question p. i'm not going to say friday's jobs report, although that's important. two indicators that i love. the treasury yield curve, the difference between 10 and 30 year bonds and the 91 day treasury bills. if that's upward sloping as it is right now, the steepest it's been i think in history, that is a mini boom signal. and i just keep your eye on that because if it flatten ors in-ver, it will be a disaster. other one, the conference board's index of leading

indicators. that's also very, very important. and that one's showing a mini boom, as well. there you can see it. let's go to now first video caller. we have earl from overland park, kansas. >> hi, larry. your message about free market capitalism is the proceed found. as a tea partier, i got to ask the question, why not go all the way and untax capital by using the fair tax? >> if i could figure out a good fair tax proposal -- fair tax is essentially a national sales tax type tax. it should be very, very simple. and we would not tax capital, we would not tax dividend, we would not tax the death tax. and hopefully we would keep the sales tax rates, i don't know, somewhere around 20%, 25%. there are always issue, but a good idea. very close to the flat tax and,

yeah, let's stop taxing capital two, three, four, five times because without capital you can't have good businesses and jobs and income to spend. let's go to tom in troy, michigan. good evening. >> caller: good evening. my question real quick is, 1900 to the year 2000, we had roughly three to four infrastructure bills in this country, the last one being the internet. during each we have americans invest heavily into the economy, we have a bubble followed by fraud and deceit. and then the market stays flat for quite some time. my question to you is what do you see as the next infrastructure built in this country because i have the feeling the obama administration is at the wrong end of the equation. >>. >> i'm not a great believer in these public infrastructure booms. you have to do some of it for road, highways and bridges. i think you're right we did havç the great internet buildup. i think one of the great

infrastructure booms in the next ten years could be a tremendous, tremendous proliferation and boom in energy. and i'm talking energy across the board. i'm talking about drill, drill, drill for oil and for gas. i'm talking about clean coal. i'm especially talking about a buildout in nuclear power plants which can supply our electricity and maybe get the cars to run properly. i want it done if tn the marketplace and i want the government to deregulate and unleash the great american energy sector. that could b b unbelievably gret buildout for economic growth. let's go to todd in canton, ohio. happy new year. >> caller: thank you for taking my call. my family loves your show. i would like to know your thoughts on how to best stimulate manufacturing in the u.s. aside from things like tax cuts or protection tariffs or accelerated depreciation credits. what's the next generation of -- >> you know what, i think the best thing for american

manufacturi manufacturing, you may disagree with this, i want free trade. i want free trade. importing and exporting. by the way, manufacturing numbers are coming in very, very strong as per today's factory orders and shipments as per the ism report. but the best thing for manufacturing, you talk to fred smith at fedex, you talk to intel, they will tell you, free and open trade, we can sell all our goods to foreign markets everywhere, and we can bring in whatever we need. and the other thing we need is zero expensing. full cash experiencing. deduct the entire expense for tax purposes of plant and equipment investment. that is the way, too. that's one of the things fred smith taught me. but manufacturing is on the rebound. coming up, my last thought. thank you, callers. you were terrific tonight. and t- hurt-a-bit business. because we don't just work here. we live here.

these are our families. and our neighbors. and by changing lives we're in more than the energy business we're in the human energy business. chevron. we should send them overnight with fedex. i already sent them. i didn't use fedex. better cross your fingers. [ man ] oh, yeah, the accident. well, you better knock on wood. remember, we did a green renovation in here, there's no wood. but russ bought a rabbit's foot. it's a bear claw.

you could throw salt over your shoulder. actually, that's a salt substitute. but you should find dan -- i think he's a leprechaun. what is it about me that says leprechaun? can someone tell me please, someone? you should have used fedex. [ male announcer ] we understand. you need reliable overnight shipping.

i just want to reemphasize my theme. it will change the political map come this november. we've already seen evidence of that in virginia and new jersey. we may see some more evidence of that in the special senate race in massachusetts. stocks have been sniffing out the tea party movement and its influence on free market populism and the republican party and i think the stock market likes it a lot. big government, big taxing and regulating will be on the decline about if this free

market populous movement takes off. that's an important new year's theme. tomorrow night, be sure to watch us. about i'll have john taylor, stanford university. he's going to fight back against ben bernanke's whitewashç of a fe fed culpability. we will visit with him at some length. in the morning i'll be on the call with melissa francis. thanks for watching tonight. right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road. 154 are tracking shipments on a train. 33 are iming on a ferry. and 1300 are secretly checking email on vacation. that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network.